Why Do Regulatory Agencies Punish? The Impact of Political Principals, Agency Culture, and Transaction Costs in Predicting Environmental Criminal Prosecution Outcomes in the United States

Studies of administrative behavior are keen to examine the internal dynamics of agency decision making, as well the impact of external political actors on agency actions. Yet few studies apply these findings to the question of why agencies use their most punitive enforcement powers. Contrasting principal-agent, transaction costs, and organizational culture models of agency behavior, this study examines why regulatory agencies punish. Through content analysis of nearly one thousand of the U.S. Environmental Protection Agency's criminal investigations and subsequent prosecutions, 2001-11, findings suggest that punishment severity in environmental criminal cases is based less on transaction costs and political pressure and more on professional norms that value strong enforcement. These findings have important implications for explaining regulatory outcomes and administrative behavior.